Economics-What is the difference between the federal deficit and the national debt?

Why r u asking about the federal deficit & not the federal surplus. The reason is because the country, 95% of the time, runs a defitcit, that is, in any given fiscal budget year, the government spends more money than it takes in, in tax revenues.

If they do run a budget surplus, that means they spent less than they took in (like I said, that does not happen very often).

For example, this past fiscal year Oct 2006-Oct 2007 they took in about $2400 billion dollars, but they spent about $2700 billion dollars, so take 2400-2700= a minus 300 billion or a 2007 fiscal year budget DEFICIT of about $300 billion (if it would have been a plus, they would have called it a budget surplus).

Now take all the budget surpluses & budget deficits since the country started, & add them together & u get the National Debt.

For example, we now have a National Debt of $9100 billion, if fiscal year 2008 (which started this month), we have a budget deficit of $500 by next October, 08, u will need to add that $500 billion to the total National debt of $9100 billion: $9100 billion + $500 billion = $9600 billion for the National Debt. (if it turns out we run a budget surplus, most likely NOT, u would subtract the budget surplus from the National Debt, that is, when u run a surplus, the National Debt gets smaller).

So far the budget deficits have far out paced the budget surpluses & that is why we have a huge National Debt of $9.1 trillion (FYI, trillion has 12 zeros in it).

Like I said, most of the time we run a budget deficit, so each year we do, the National Debt will get bigger. If by chance we run a budget surplus that would subtract from the National Debt, & the National debt would get smaller.

Different politicians

The federal deficit is the difference between the revenue (generated by taxes) and the money the government pays out in a given fiscal year.

The national debt is comprised of actual loans (obligations that must be repaid) that the government has taken out. Examples would be T(treasury)-bills, T-bonds, and T-notes.